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California’s governor, insurance commissioner and state treasurer would be able to purchase insurance in the private market to cover the costs of disaster response in the event of a catastrophe, such as wildfire, under a bill introduced Thursday.
S.B. 290, or the California disaster insurance bill, would allow the state to dip into existing emergency funds to pay a premium that would trigger “payment to the state in the event of a disaster,” the state insurance department said in a statement.
“Rising wildfire suppression costs can strain California’s financial resources and threaten cuts to critical programs,” said state Sen. Bill Dodd, D-Napa, who introduced the bill with California Insurance Commissioner Ricardo Lara and Treasurer Fiona Ma on Thursday.
The bill would allow the state “to invest in an insurance policy to ensure budget predictability and reduce taxpayers’ exposure to increasing costs associated with disasters, especially wildfires,” Sen. Dodd said in the statement.
“As we confront destructive climate-driven events, we need to be open to new models that reduce risk to our communities and budgets,” Commissioner Lara said in the same statement.
Insurers are financing some of the rebuilding efforts after the 2017 and 2018 wildfires in California, according to a statement from an insurance industry trade group.
“Insurers understand the need for new products and strategies to finance the mitigation and recovery from these unprecedented wildfires,” Armand Feliciano, vice president for the America Property Casualty Insurance Association, said in a statement.
The federal government, World Bank and state of Oregon have all used insurance to reduce the risk to taxpayers following disasters, according to the insurance department statement.
Oregon has purchased insurance against everchanging wildfire costs for nearly 40 years, spending $61 million in premiums and receiving $102 million in insurance payouts, said the statement.
The bill is now subject to a 30-day waiting period before it can be scheduled for a committee hearing.
Commercial insured losses reported thus far from the recent Camp and Woolsey wildfires in California total $571.3 million, just a small part of the $9.05 billion in total insured losses from the fires, the bulk of which are residential, according to data and information from California Insurance Commissioner Dave Jones.